Sustainable energy indices mixed, broad markets gain while commodities retreat (week ending 7/18)

Tags: LED, biofuels, greentech, DJP, VSE, OESX, cleantech, OESX, DJP, VSE
20 Jul 7:06am
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Author: Mark Henwood

Emerging Markets, EAFA, and S&P500 all rose this week partially on reduced pressure on commodities (DJP) which fell 7.8% for the week.

Biofuels shares responded mid-week to news that Verasun (VSE) was keeping 330 MGY per year of new capacity idle. As I wrote in my post for the week ending June 13th with tight margins it comes as no surprise that producers are reducing production plans . With ethanol consuming somewhere around 30% of corn supplies the cost of corn should respond to a reduction in ethanol production. Reduced ethanol supplies should be supportive of stronger ethanol prices. At some point an equilibrium will be reached.


Later in the week UBS upgraded the ethanol sector to a buy on "improving margins". VSE's price (and others) responded strongly gaining 21% on Friday and ending the week up a huge 49% at USD 6.12/share. With this big change I thought the margin on producing ethanol would have materially improved. True, corn has been dropping significantly since the start of July with the December contract closing Friday on the CBOT at USD 6.28/bushel. But ethanol has been falling also in July, with the December contract closing Friday at USD 2.36/gallon leaving the "corn crush" margin at the same slim USD 0.2/gallon it was in the middle of June when Verasun's stock price was below USD 5.0/share. I'm not sure I understand the improving margin argument.



The LED-Lighting strategy continued to disappoint falling an additional 9.9% for the week with a cumulative decline of 35% since we started tracking the sector at the end of March. Orion Energy Systems Inc. (OESX) lost 38.7% of its value for the week after it reduced its guidance for 2009 to a 25-28% growth rate, down from its previous 50% expectation. With its long term potential, I'm looking for signs this strategy may be fairly priced after this year's big correction.


Mark is the founder of Camino Energy, an information provider specializing in globally traded sustainable energy stocks. He also is an investor in sustainable energy stocks and has positions in Renewable Electricity.

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I am a merchant banker and co-founder of Jane Capital Partners LLC, where I head the energy and environmental practice, and prior to that worked in venture capital, private equity and investment banking in the tech and energy sectors. We have co-founded four emrging startups in cleantech and IT (in superconductors, fuel cells, RF, and carbon credits) since the tech wreck, and advise the technology and venture investment arms of three multi-nationals. In all of it, I have been lucky enough to work with some amazing colleagues, bosses, and partners. Besides Cleantech Blog, I am a contributing editor of AltEnergyStocks.com, and contributing author to Inside Greentech. Along with our own, the blogs I regularly read include Jim Fraser's The Energy Blog, Rob Day's CleantechVC, Tyler Hamilton's Clean Break, Joel Makower's Two Steps Forward, and Inside Greentech. My areas of expertise are always a work in process, but I have been quoted, cited, or interviewed on energy, alternative energy, and cleantech issues by numerous online and print publications including Red Herring, Energy Intelligence, Time.com, Bloomberg, San Francisco Chronicle, Forbes.com, Ethical Investor, Wall Street Reporter, and FT.com among others, on topics ranging from: cleantech, solar, ethanol, blogging, technology commercialization, corporate venture investment, energy prices and policy, technology transfer, carbon trading, and renewable and alternative energy. Feel free to contact me at dikeman@janecapital.com. Mr. Richard T. Stuebi Richard Stuebi has nearly 20 years of experience as an executive, entrepreneur and consultant in the energy industry, with most of the past decade focused on advanced energy technologies. He is currently serving as the BP Fellow for Energy and Environmental Advancement at the Cleveland Foundation, one of the largest community foundations in the US with over $1.6 Billion in assets. He works with various public and private sector stakeholders to promote commercial activity in advanced energy in the Cleveland area. Mr. Stuebi has authored numerous articles that have appeared in such leading industry periodicals as The Electricity Journal and Public Utilities Fortnightly, and has presented at numerous major energy conferences. He is a contributing columnist to Cleantech Blog, writing on alternative energy issues, news and events. Prior to joining the Foundation, Richard founded NextWave Energy, a professional firm focused on capitalizing upon new business opportunities stemming from innovative energy technologies. As President of NextWave Energy, he assisted several emerging and established private-sector clients in various aspects of business development, including strategy and capital formation. Previously, Richard was a senior vice president at Louis Dreyfus, the global commodity trading firm and was a management consultant in the energy practice of McKinsey & Co. Richard earned degrees in economics from the Massachusetts Institute of Technology and Stanford University. His areas of expertise include: Economics in alternative and renewable energy, energy policy, trade, and development. Cleantech finance and technology strategy. You can contact him at rts@nextwave-energy.com. Ms. Heather Rae Heather is a green marketing expert and a long-time advocate of green technology and sustainable business. Through her consultancy Brae Consulting, Heather has worked for energy companies, cleantech startups, and nonprofits (she is currently working with a home energy efficiency program of the Maine Governor's office). Her previous corporate marketing experience includes Xcel Energy (demand-side management and green power) and Qwest Communications. A hands on expert - Heather has practiced what she preached. She is certified in high performance residential building (Green Advantage®) and has served as co-director of Colorado's Interfaith Power & Light. Readers of Cleantech Blog will know that Heather converted a retired school bus into the Brae Bio Bus, a recreational vehicle running on biodiesel (B100) with solar panels for auxiliary power, and recently drove it across the country blogging the experiences in finding biodiesel in different parts of the US. Having reached her destination at Maine Home Performance, a program of the Maine Governor's Office where Heather is helping design programs to certify and link Maine contractors with homeowners who want to "go green", Heather is now tackling the conversion of an 1880s Maine farmhouse into an energy efficiency and green showcase. Heather graduated from Wesleyan University and is a contributing columnist to Cleantech Blog writing on green and sustainable products and marketing from the consumer's point of view. Her areas of expertise include: Green marketing programs and strategies, grass roots green and sustainable programs for consumers, using green technologies in the home. You can contact her at heather.rae@braeconsulting.com Mr. John Addison John is an accomplished writer, speaker, and expert in technology marketing and strategy. He is one of the IT converts that are driving the cleantech industry. Since 1992, his marketing consultancy OPTIMARK, Inc. has provided educational programs, market intelligence, market development and partner development for technology and government leaders. A believer in cleantech's potential to change the world for the better, John is the Publisher of the Clean Fleet Report and serves on the Board of the California Hydrogen Business Council. He is a contributing columnist to Cleantech Blog. He is the author of the book Revenue Rocket on channel marketing in technology, and the upcoming book Save Gas, Save the Planet on what we as individuals can do to help save the planet. Earlier in his career John was an area channel manager for Sun Microsystems. For three years, he led a sales team to 300% annual growth in 15 states, increasing revenue from $4 to $110 million. He has taught courses about marketing and innovation at U.C. Davis and U.C. Santa Cruz Extension. He is a popular speaker in the Americas, Europe and Asia. You can find more of his speeches and articles on his websites Clean Fleet Report and Revenue Rocket. His areas of expertise include: Technology marketing and marketing strategy, channel marketing, fuel cells and the hydrogen economy, alternative fueled fleets, and California's energy tech corridor. You can contact him at johnaddison1@gmail.com. Dr. Peter Beadle Peter is the owner and CEO of GreenJobs.com. He is an is an experienced technology executive and an expert on a wide range of green and energy technologies, including photovoltaics, fuel processing, fuel cells, and oil & gas technologies. Green Jobs is one of the few dedicated job sites for the renewables and cleantech industry. They put out the online Green Directory, as well as a weekly newsletter on People News in cleantech. Peter is a contributing columnist to Cleantech Blog writing on renewable energy news and events. Peter holds a PhD in Physical Chemistry, and previously served President of BP Solar's North American division. Prior to that he held a number of positions in R&D and technology management within British Petroleum. His areas of expertise include: Solar, fuel cells, oil & gas, renewable energy job market You can contact him at Peter@greenjobs.com.